Rodrigo Amaral talks to Rui Mendes, head of cards
at Portugal’s largest retail bank, Caixa Geral de Depósitos.
Despite being the market leader in a number of retail banking
product lines, CGD remains far behind in terms of credit cards. It
is hoping a string of innovative products will win it quick market
share.
State-owned Caixa Geral de Depósitos (CGD), Portugal’s largest
retail banking group with 776 branches and a 33 percent retail
banking market share, has launched a major credit card offensive
through to the end of 2008 as it looks to use its market dominance
to close out commercial rivals Millennium BCP and Banco BPI. CGD
has rolled out a string of new, innovative card products over the
past few months, and more are in the pipeline. The idea is to offer
cards with services and benefits that exploit the strengths of the
whole group, which is also Portugal’s largest life and non-life
insurer and unit trust manager.
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“We are aware that our clients are chased by other companies
that offer them credit cards,” says Rui Mendes, head of cards at
CGD. “So we decided some three years ago to cover all product areas
in order to serve private and corporate clients alike.”
The latest segment to be targeted is women. In early June, the
bank launched Caixa Woman, a mini credit and debit card which looks
to appeal to the market with a range of benefits that include
insurance packages and discounts of up to 5 percent in certain
shops.
CGD has signed agreements with the providers of services that it
believes are of particular interest to the segment: they can use
the card to pay less for flowers or baby-sitting services, as well
as beauty treatments, laundry services, and home renovation and
gardening products, among others.
“They are the first cards for women in Europe, and maybe in the
world, in the mini card format,” Mendes tells RBI.
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By GlobalDataCaixa Woman is the most recent example of a string of
initiatives trying to convince CGD’s clients and potential
customers about the benefits of using its credit cards. “We are
always looking at opportunities to launch new products, both in
tandem with external partners, but also within the many areas where
Caixa is already a player in the market,” adds Mendes.
In the former group belong initiatives like last April’s launch
of a credit card in partnership with ANF, the Portuguese
association of pharmacies, through which customers can postpone
payment for medicines by up to 135 days. ANF expects that more than
440,000 Cartões Farmácias Portuguesas will be issued up until the
end of the year.
Targeting specific market segments
In the other half of its strategy are products like the Leve
Card, aimed at helping customers save for their retirement. Of
every €100 spent with the card, up to €1.5 is transferred to a
retirement saving plan indicated by the user. The card is the
result of synergies within the company – it is co-branded with
Fidelidade Mundial, an insurance company that belongs to the CGD
group.
Another card, in partnership with the Visabeira group, lets
customers earn vouchers to claim discounts at companies owned by
Visabeira, a company active in sectors like tourism and property in
which CGD is a major shareholder.
University students, a segment in which CGD says it has a
banking market share of 69 percent, is another underserved card
market. CGD has signed agreements to issue cards for Universidade
de Lisboa, Universidade de Coimbra and Universidade do Minho, three
of the most important universities in the country. In addition to
offering credit, students who have the card can also use it to
access parking lots and libraries, thanks to a capacity to store up
to 2KB of data for university purposes. Teachers and other staff
members of the universities can also have cards issued for
them.
Another key target market is small and medium-sized companies, a
group which forms the core of the Portuguese economy. Due to its
wide geographical spread and its links with the state, CGD is a
traditional provider of banking services to these companies, but
until recently it wasn’t offering them a corporate credit card.
The Caixaworks card is expected to fill this gap, as it can be
used by the holder to help manage company cash flow and to have
access to quick credit. The card can also be accompanied by a whole
set of insurance products provided by other companies of the
group.
Mendes believes there is room to grow in the market by using
tools like these, as the use of credit cards in Portugal is still
below the levels of other European countries. “Portugal’s card
markets are not underdeveloped, but neither are we as developed as
places like the UK,” he says. “Here, everybody has debit cards, but
the penetration of credit cards is not too deep.”
CGD has issued some 4.5 million cards so far, of which almost 1
million are credit cards. But the gap between debit and credit
cards in the company’s books is set to get narrower, he adds.
“We have long been the largest retail bank in Portugal, but we
didn’t lead in the credit card market. So, in tune with Caixa’s
strategy, we are making a great effort to become the number one in
this segment as well. We should reach the top position by the end
of the year,” he says.
He adds that new card products are in the pipeline already,
though he will not reveal exactly what the plans are. A hint is
that they will deal with the themes of insurance and
sustainability. CGD will also soon launch its first prepaid
cards.
The group reported consolidated 2007 net income up 16.7 percent
to €856.3 million. Its retail banking operation accounted for
€528.8 million of this income, up 15.6 percent over 2006.
